Macroeconomics Essay

794 WordsOct 23, 20134 Pages
Fundamentals of Macroeconomics Fundamentals of Macroeconomics The following will discuss the definition of Gross Domestic Products, Real Gross Domestic Product, Nominal, Unemployment Rate, Inflation Rate, and Interest Rate. We will also discuss Economic activities and its affects to government, households, and businesses. We will describe the flow of resources from one entity to another for each activity. * Gross Domestic Product (GDP): Is the market value of all officially recognized final goods and service produced within a country in a given period of time. * Real Gross Domestic Product (Real GDP): Is a macroeconomic measure of the value of economic output adjusted for price changes. * Nominal: are the interest rates we see and pay. Real interest rates are nominal interest rates adjusted for expected inflation: Real interest = Nominal interests rate – Expected inflation. * Unemployment Rate: People that are actively searching for a job. * Inflation rate: is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. * Interest Rate: is the rate at which interest is paid by borrowers for the use of money that they borrow from a lender. Specifically, the interest rate is a percent of principal paid a certain amount of times per period. For example, a small company borrows capital from a bank to buy new assets for its business, and in return the lender receives interest at a predetermined interest rate for deferring the use of funds and instead lending it to the borrower. Interest rates are normally expressed as a percentage of the principal for a period of one year. Economics activities purchasing of groceries The purchasing of groceries has many affects on the economy. For the government when

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